BANKING SECTOR PROFITABILITY IN 1H/CY07 - BOOMING
Sep 10 - 16, 2007
There are 39 schedule banks operating in Pakistan. Out of which 25 banks are listed at Karachi Stock Exchange. These banks represent 91% and 94% of total banking sector assets and deposits as on Dec 31, 2006. The combined profitability of these listed banks 1H/CY07 arrives at Rs50.03bn, an outstanding growth of 42%. In absolute terms, Habib Bank was earned the most amounting to Rs.12.79bn, up by 223% when compared against last year's profits. However, banking sector's profits figures show a marginal surge if one time capital gain of Rs10.5bn booked by HBL is excluded. While in percentage terms NIB Bank profits rose the most by 1216% to Rs.171m. Net interest income during the first half of the calendar year crossed Rs90bn, up 21%. The relatively lower growth mainly relates to the higher base effect. Moreover, dull growth of 3% in advances was also a reason behind this. Non interest income of the banks witnessed an impressive growth of over 74%. Fee, commission and brokerage income also depicted a healthy growth of 27%.
Bank of Khyber
Bank of Punjab
Habib Metro Bank
Saudi Pak Bank
Standard Ch. Bank
* ABN AMRO formally re-branded all Prime Commercial Bank branches in Pakistan on 1 Sept, marking the completion of the merger of the two banks. As a combined entity, ABN AMRO is now the second largest foreign bank in Pakistan with total assets of Rs124bn (EUR 1,547 million) and over 5,500 staff.
* Bank of Punjab would take over all 160 branches of the Punjab Provincial Cooperative Bank (PPCBL) before December 31 this year. PPCBL was incorporated under the Cooperative Societies Act, 1912 and given the status of commercial bank by SBP in 1955. As a result of the acquisition BoP's branch network would rise to somewhere around 421.
* The Atlas Bank Limited has signed an agreement to sell 24.9% shares of the bank to a large European banking group, Deutsche Investitions-und Entwicklungsgesellschaft mbH (DEG). Unlike the complete sell-off, the Atlas group would sell a minority share of about 25% to the DEG group, enabling it to take a seat on the board of directors.
Collective profits of all Islamic banks operating in Pakistan could not reach even half a billion rupees last year while the conventional banking generated massive profit for the sector. Among 39 scheduled banks, four are in operation as full Islamic banks, but their existence in terms of advances, deposits, assets and profits was simply negligible, putting no threat or competition to conventional bankers. Balance-sheets of Islamic banks showed that the two banks earned profits while the two others booked losses during the year. The Meezan Bank was the only bank which exhibited some potential to grow and earned a profit after tax of Rs402m. Al-Baraka Islamic Bank showed a token profit of Rs170m. The rest of the two banks were in losses. Dubai Islamic Bank Pakistan showed a loss of Rs633m while the loss of Bank Islami Pakistan was to the tune of Rs37m. The whole balance-sheets of Islamic Banks showed a poor performance while comparing it with growth in banking industry, and profits earned by conventional banks in Pakistan. Islamic banking industry has been claiming to establish a parallel banking system in the country, but growth of Islamic banking is reverse against the claim.
UP-COMINGS IN THE ISLAMIC BANK
* BankIslami is a joint venture of Dubai Bank, DCD Group of UK and Jahangir Siddiqui and Company Ltd. with each party owning 18.75pc of the bank. BankIslami has reached an agreement with Jahangir Siddiqui and DCD Investment Ltd of JS Finance Limited for acquiring their 100% shareholding in the bank.
* Noor Financial Investment Company of Kuwait has acquired 19% shares of Meezan Bank, country's largest Islamic bank, from Shamil Bank of Bahrain. Noor Financial Investment Company already had some 16% shares of Meezan Bank and after the current acquisition its holding would reach 35% in the Meezan Bank. Noor Financial Investment Company purchased some 71,818,040 shares of Meezan Bank from Shamil Bank of Bahrain for Rs.32/share.
The highly lucrative and profitable banks of Pakistan are being astutely viewed by foreigners. So and so that the world's second-largest bank "The Industrial and Commercial Bank of China (ICBC)" has entered into an agreement with the National Bank of Pakistan (NBP) for co-operation in establishing its presence in Pakistan. ICBC, with US$41mn in assets and 18,000 branches stands out as world's second largest bank. The Chinese banking giant is currently looking into two models. One choice that ICBC was thinking over was to establish its presence by acquisition of existing banks or opening its own branches and the second option under consideration was to work with the NBP as local currency provider for the bank's investment in giant infrastructure and other projects.